BuyFind

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
BuyFind

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

Solutions

Chapter 7, Problem 1TY
Textbook Problem

A firm’s total fixed cost is $360,000. Construct a table of its total and average fixed costs for output levels varying from zero to six units. Draw the corresponding TFC and AFC curves.

Expert Solution
To determine

To find: The table showing TFC and AFC and the curve of these costs.

Explanation of Solution

Below is the complete table. Here, the average fixed cost is calculated by dividing the total fixed cost by outputs.

  AFC=TFCQ

    Output Total Fixed cost (fig. in thousands) AFC (fig. in thousands)
    0 360 0
    1 360 360
    2 360 180
    3 360 120
    4 360 90
    5 360 72
    6 360 60

Below is the curve that shows the total fixed cost curve and the average fixed cost curve. Here, the horizontal axis shows the output. While the vertical axis shows the price or costs.

  Microeconomics: Principles & Policy, Chapter 7, Problem 1TY

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